What’s Google’s dinky new driverless car got to do with manufacturing?

Google’s new driverless car is so dinky and limited to 40 kph — who would want to buy it? My guess is, not many people. But that’s not the point.

The real question is: who would use it to take them from A to B on demand? My guess is most people. Just about everyone hops in a standard taxi without being at all worried about what it looks like, or how it drives.

Of course, many will still want to own their own machine — for a while. Remember, once upon a time, cars were limited to walking pace with a person leading, holding a red flag  so as not to frighten the horses. A real man would never give up the reins to his horse for one of those!

So yes, today, a ‘real man’ still wants his own flash machine to drive. And, just as some people still love to ride, so some will still want the thrill of holding the wheel, foot hard on the pedal. But if history and research are any guide, it will be a fast-diminishing minority.

The research shows that many young kids are not interested in driving at all — it distracts from being online and connected. Give them access to a driverless car to pick them up and put them down on demand — just like mum and dad — and they will be in heaven.

Unsurprisingly, the auto industry remains in denial. Mustafa Mohatarem, GM’s longtime chief economist, has said to Automotive News, “I don’t see any evidence that the young people are losing interest in cars. It’s really the economics doing what we’re seeing, and not a change in preferences.

Well, he would say that, wouldn’t he?

The article notes: “Instead of accepting the premise that millennials see car ownership as not cool, automakers are insisting that low rates of driver’s licences and vehicle purchasing by young people come mainly as a result of car ownership being out of reach financially for this group right now. As the economy improves, and as millennials get a little older and have more need for cars due to work and family responsibilities, auto experts assume that this generation will have to embrace car ownership to a much larger degree. They see the car-ownership alternatives — public transportation, as well as services like ride sharing and car sharing — as having only a negligible impact on the auto-sales business in the future.

But what’s missing from this discussion is autonomous driving and the shift to the true service economy.

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Google’s strategy of limiting speed to the average speed of city traffic is brilliant. It gets people used to the vehicle, while limiting risk and consequences — proving safety and reliability. Within a couple of years of first release, speed will increase and other cars will become available across the whole range of vehicle types. Add to this the trend towards the sharing economy and the move from the sale of goods (cars) to the supply of services (transport), and the implications across society are massive.

What has this to do with manufacturing?

New entrants will bring an entirely different business model to the table — one that better suits the real needs of people, and is much kinder to the environment. A company that sells driverless transport on demand wants to keep the number and cost of vehicles to a minimum, and wants them to last as long as possible. The vehicles should not crash, and must be easily and cheaply reparable if they incur minor damage. Finally, they need to be easy to maintain, refurbish and re-cycle, to keep material and operating costs as low as possible. If you are in the business of supplying a service, you don’t have to spend so much on marketing. When was the last time you saw an ad for a train, bus or taxi service?

This is entirely different to a company which builds in obsolescence and spends a fortune on marketing because they need to sell more of the product every year. Current car companies just love accidents (except those caused by their own cars, of course) because, as we know, they make huge profits from spare parts.

Already, Phillips is moving to sell light, as opposed to lightbulbs — to deliver the required lumens within a specified area at specified times for a set service fee. The aim is to reduce the number and cost of bulbs, while extending their life.

I don’t want to frighten the horses, but perhaps traditional car companies need their own lightbulb moment regarding the combined impact of autonomous driving and the service economy. Australia is in the process of losing its entire vehicle manufacturing industry. Perhaps this is the opportunity to start a new industry that designs, makes, maintains and refurbishes autonomous electric vehicles, as a new form of public transport.

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